President Obama’s proposed $255 billion economic stimulus package, tendered as part of his plan to address the looming fiscal cliff, has hit a brick wall with Republican lawmakers and is unlikely to be included in any final bargain.
Obama recommended the increased spending to bolster the lackluster national economy. The proffer includes $50 billion to fund an infrastructure bank, an initiative long supported by the administration, to assist in the construction of bridges, roads and similar projects. It also seeks to extend the 2 percent payroll tax cut, provide a tax incentive for businesses, and continue additional funding of unemployment benefits.
All of it was crammed into a package intended to attack the nation’s growing debt, which now is at $16.3 trillion and growing. Obama also hopes to raise about $1.6 trillion in tax revenues, primarily by permitting an income tax break extended during the administration of President George W. Bush to those families earning $250,000 or more to expire. He also has acknowledged the need for unspecified program cuts.
Failure to reach a debt deal with Congress could result in what has been characterized as the fiscal cliff. Lawmakers adopted, and Obama signed, legislation in 2011 to kill all Bush-era tax cuts and make mandatory cuts in various federal programs, including defense and health, if an alternative deal wasn’t struck. The White House and congressional Republicans are working to resolve differences by the end of the year.
Obama maintains the stimulus is needed to create jobs and grow the economy, factors that could result in increased tax revenues.
“If we’re serious about reducing our deficit, we’ve also got to be serious about investing in the things that help us grow and make the middle class strong, like education, and research and development, and making sure kids can go to college, and rebuilding our roads and our infrastructure,” Obama told supporters during a rally at the Daimler Detroit Diesel Plant in Redford, Mich., on Monday. “We’ve got to do that.’’
But Senate Republican Leader Mitch McConnell, of Kentucky, rejected the entreaty, insisting that Washington has to reduce, not increase, spending to get the economy back on its feet. Increased stimulus spending, he argued, is “something no reasonable person had publicly contemplated previously.”
“A couple weeks ago, we saw his plan,” McConnell said Tuesday. “After four straight trillion dollar deficits and two years of running around calling for a balanced approach to bring those deficits under control, we saw his idea of ‘balance’ — a $1.6 trillion tax hike, new and totally unprecedented power to raise the federal debt limit at his whim and $50 billion in stimulus-type infrastructure programs — in other words, even more spending.’’